How do I retire/dismantle obsolete warships in MOO2? Is there a button for this?

In Fleet view click on them and choose scrap. They should be at one of your planest, so you will get cash.

But you can upgrade them, too, if you plan on getting new ships the same size class. Advantage here, they still have their experience.

Upgrade is also often cheaper and faster, since you usually won't replace everything.

You can't upgrade captured ships, however, scraping captured ships employing unknown to you technology has a chance to reveal that technology.